GPS Business News: Can you introduce your company?
Andy Walker: m-spatial’s focus is to provide local information on mobile devices. We started out in 2001, really before mobile navigation took off. At the beginning we worked a lot on how to represent maps on very early mobile phones. But really in the last few years we have been focusing on local mobile search. And when I mean local mobile search it could be on a phone where you are on the go and looking for local information – in this case we deliver the mobile application and the data. Or it could be on a personal navigation device (PND) if you are looking for information more precise than a basic POI (Point Of Interest). In this case manufacturers can embed our mobile local search application into their device. We believe that people deserve a rich experience. Users of Personal Navigation Devices (PNDs) when they are looking for a particular place - an hotel or restaurant for example - should be provided with enough information to make a choice if this is a place where you want to go: whether through a picture or a description or whatever rich content.
I would like also to mention another use case, this is people who are looking first on the web, then might use what they have found on their device. To answer this need we have developed a product we call Spacemark. With Spacemark you can perform a local search on the web then transfer and store your result on a mobile device. We are just starting to work with PND manufacturers on this product.
AW: I will give you a few examples. We provide wireless operator Orange with “Orange Local” in the United Kingdom. This is a Java application for local mobile search. We are also working with Seat Pagine Gialle, which is the leading business directory company in Italy. For them we have developed a mobile application that is now available with the Italian wireless operator WIND.
GPS BN: What is the size of m-spatial? Are you profitable?
AW: We are eleven people today. We secured a serie A round funding in October 2002 from venture capital companies including Prelude, Alta-Berkeley and Delta Partners. There have been a number of funding rounds of undisclosed value since. We are not profitable yet.
GPS BN: How is your business doing?
AW: We are doing fine. This is a really interesting time. First, there is a lot of interest for our solutions from carriers. Of course some are looking for branded search such as Yahoo or Google applications, but others are looking for white label customized solutions such as what we offer.
Second, looking at the consumers, when we started this business nobody knew you could do local search with a mobile phone, now it is really starting to change. There is more and more consumer awareness. Also I think things like the iPhone are really shaking up the market in providing real data centric devices to consumers.
Third, I think also our experience with ad-funded models is very interesting for navigation providers that will look more and more into that direction.
AW: I think you are right. The market dynamics is to make PNDs the cheapest possible. But I also think ultimately there will be segmentation. There will continue to be products that offer a basic experience and basic POIs, but there will be also products offering an enhanced experience with more value added content.
GPS BN: Through your business you are in contact with a lot of “geo-content” providers: what is their level of knowledge about the navigation market?
AW: First I think it is important to notice we see more and more content providers actively looking to offer their content into the mobile space, which is a good trend. But I think there is also some ignorance about the navigation space from these content providers, especially from a business model perspective. Some of them think there is a lot of money made on this market therefore they think they can sell their content at a high price. I believe the reality is different, money can be made but not at the level they are looking for.
AW: Yes, certainly. In one hand the people that own rich POIs content tend to see this as very valuable information, but in the other hand navigation providers, who are facing strong price pressure, just see this as an add-on, not a core proposition. However, from the business listing standpoint, there is now a beginning of understanding that money can be made on advertising which will almost make money flying the other direction. I think this is really interesting.
GPS BN: If we look at the advertising-funded business model, what are the views of the navigation providers? Do they understand it as a possibility in their pricing mix, or are we too early for that?
AW: I think they understand the concept, but it is very much like mobile operators, they are very careful about this business model. The companies that are really advanced on this business model think you have to segment the market. It is the only way to avoid cannibalizing paying customers. The problem also is to have advertisers willing to pay for ads on PNDs. So I believe the trend is that it will come first to the mobile world before coming to the navigation world.